The U.S. stock market experienced tremendous volatility in early April. It tanked significantly for a short time when officials made known that there would be temporary tariff exemptions for electronics coming from China. After a bleak first week, the S&P 500 had fallen by 9% for its worst week since 2020. The index rebounded on the second week by 5.7% to post its strongest weekly return since early 2023.
On Wednesday, the stock market achieved its third-largest single-day gain in modern history. This announcement came in the wake of former President Donald Trump’s announcement to suspend most “reciprocal” tariffs for 90 days. Yet the Trump administration only recently announced that it had granted exemptions from its tariffs on some electronics. This announcement was buried in a series of bad news notices from U.S. Customs and Border Protection, made public late last Friday.
Despite these positive developments, the S&P 500 still trades below its April 2 closing price of 4,028. That date is just two weeks before Trump’s first tariff announcement. Those new exemptions don’t touch the current one-fifth tariff imposed on all imports from China that are associated with the fentanyl trade. This volatility has made some investors apprehensive.
Indeed, stock futures experienced a “Tariff Fizz” over the weekend as investors celebrated news of these exemptions. On Monday, the Dow Jones Industrial Average dramatically jumped by 480 points, a 1.2% increase. At the same time, the S&P 500 surged along with it, up 1.75%. It was the tech-heavy Nasdaq Composite that jumped the most, soaring 2.4%.
Yet, worries continue over how Trump’s trade policy will play out in the years to come. And as analysts have noted, the policies have been vague. This fundamental uncertainty has kept traders guessing as to the best way to play their trades.
“While any delay of tariffs is beneficial on the margin, it is not the same as their removal,” – Analysts at Morgan Stanley
This sentiment is somewhat in line with many other industry professionals who are worried that the continued uncertainty could stifle U.S. economic development. Ray Dalio, a founder of the world’s largest hedge fund, recently shared his fears on the current economic environment.
“Right now, we are at a decision-making point and very close to a recession,” – Ray Dalio
Dalio warned that if we don’t manage it right, we will face the consequences of making it even worse.
“And I’m worried about something worse than a recession if this isn’t handled well,” – Ray Dalio
As we all navigate these uncertain times, investors have more than ever looked at gold as a safe haven. On Friday, the precious metal jumped above an all-time high of $3,200 per troy ounce. This year that price has shot up by more than 21%! As reported by CNBC, analysts at Goldman Sachs recently increased their year-end price prediction for gold to $3,700, citing strong demand in the face of market volatility.
Analysts at Citi expressed their surprise at the change in market mood.
“No doubt, the goldilocks sentiment in place entering this year has given way to abject uncertainty,” – Analysts at Citi